Caterpillar to cut at least 10000 jobs

24 Sep 2015 | Author: | No comments yet »

Caterpillar could cut more than 10,000 jobs as revenue slides.

Caterpillar is planning another round of job cuts that could exceed 10,000 people through 2018, as the construction and mining equipment maker adjusts to downturns in key markets that it serves.Jim Cramer answered viewers’ Twitter questions from the floor of the New York Stock Exchange and addressed Caterpillar’s (CAT) announcement that it has lowered its revenue outlook and plans to cut 10,000 jobs. ‘These numbers were chilling,’ he said. Nearly half of those job losses — 4,000 to 5,000 salaried and management employees — will come before the end of 2016, with most completed this year, the company says in an SEC filing. It then could cut thousands more jobs, raising the total cuts to about 10,000, as it figures out which factories and manufacturing sites to close through 2018.

Doug Oberhelman, CEO of the Peoria-based firm, blamed “challenging marketplace conditions” in the energy and mining sectors, as Caterpillar, one of Illinois’ biggest employers, revised downward its sales projections for 2015 by $1 billion, to $48 billion. Caterpillar also warned that total layoffs could climb to more than 10,000 through 2018 and that sales and revenue could drop in 2016 for a record fourth straight year.

Caterpillar also lowered its guidance for 2015, saying sales and revenues for the year are now expected to be about $48 billion—$1 billion lower than the previous outlook. Company officials said in a statement that industries like mining, oil and gas, construction, and rail have a history that sometimes includes prolonged downturns, but they are the right businesses to be in for the long term. The big loss in Caterpillar, which is viewed as a proxy for global economic health and a component of the 30-stock Dow Jones industrial average, dragged down the Dow. It now plans a “restructuring” at 20 more of its 103 plants worldwide, that will involve some closings, a move that will cut its total manufacturing space by about 10 percent, it said. But the majority of Caterpillar’s plants are overseas, in Asia, Europe and South America. “We recognize today’s news and actions taken in recent years are difficult for our employees, their families and the communities where we’re located.

He added, “We don’t make these decisions lightly, but I’m confident these additional steps will better position Caterpillar to deliver solid results when demand improves.” Analysts agreed that Caterpillar had to act in the face of tough market conditions. Those include low oil prices, which have reduced demand for Caterpillar engines and equipment used on oil rigs, and to pump and transport oil, as well as a “hangover” in the mining industry, which has excess capacity after years of heavy investment, according to Mircea Dobre, an analyst with Robert W. Caterpillar also said it plans on closing an estimated 20 manufacturing plants, or slightly more than 10% of its manufacturing square footage.The closings will be focused largely on a handful of key businesses: construction, resource industries and energy and transportation. Speaking Thursday morning, Ardis said he had not been given any more specific information about job losses in Peoria but added that he expected voluntary retirements to be part of the overall reduction in Caterpillar’s workforce.

He placed the coming layoffs in the context of recent major manufacturing job losses across Illinois. “Our state is hemorrhaging manufacturing jobs, and it has been for some time,” he said. “We’ve lost 300,000 manufacturing jobs since 2000.” Still, he said, he believes Caterpillar has “a good handle” on the steps it needs to take, adding that he was “very confident” that Caterpillar will rebound. Rauner spokeswoman Catherine Kelly described Caterpillar as “an important economic engine in Illinois” and said the planned job losses “underscores the need to help improve the state’s economic climate.”

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